After Reg Victories, MBL Poised For Defeat

After seeing little to no progress on credit union legislation during the first 11 months of 2012, two regulatory relief bills advanced within 24 hours of each other, with one passing both chambers and awaiting President Obama’s signature.

On Dec. 11, the Senate passed H.R. 4367, which amends the Electronic Funds Transfer Act and removes the placard fee disclosure requirement that has spurred frivolous lawsuits against credit unions and other ATM owners. The bill was passed by unanimous consent after being unanimously passed by the House in July.

NAFCU Vice President of Legislative Affairs Brad Thaler said he has heard no indication that Obama won’t sign the bill and added that the because the bill passed unanimously in both chambers, it sends a powerful message that members of Congress found common ground.

John McKechnie, partner at Washington strategy and communication firm Total Spectrum, said credit unions worked hard to bring the frivolous lawsuit issue to the attention of lawmakers, and the result was a common sense solution.

“It was so common sensical, it almost didn’t pass,” McKechnie said, referring to political hurdles the measure had to overcome. The Senate version of the bill was held up when it was packaged with another piece of legislation that would keep confidential the privileged information the Consumer Financial Protection Bureau receives from financial institutions.

Sen. Jim DeMint (R-S.C.) put a hold on both bills while he pushed for a compete repeal of the Dodd-Frank Act. After DeMint announced his resignation from the Senate Dec. 6, he removed his hold but not before the Senate instead moved forward with the House-passed versions.

H.R. 5817, a bill that would provide an exemption to Gramm-Leach-Bliley annual privacy notification requirements, passed the House the following day, Dec. 12, by voice vote. The bill now awaits consideration by the Senate.

Should that bill become law, credit unions would only be required to provide privacy disclosures to members when they first open their accounts and again when the policy changes. Currently, financial institutions are required to send the disclosure annually via mail, regardless of whether it has changed.

Credit union lobbyists have said that while the bill is not controversial, it does lack familiarity in the Senate, so the upper chamber would have to be educated on the issue.

“Since there has been no companion bill introduced in the Senate, it hasn’t made a lot of sense to talk about the legislation, especially given the other things we have been working on in Senate,” said CUNA Senior Vice President of Legislative Affairs Ryan Donovan. “We will reach out and see what appetite the Senate has for one more piece of regulatory legislation.”

Despite claiming two reg relief victories, credit unions came up empty handed once again in efforts to raise the member business lending cap to 27.5% of assets. Earlier this year, the atmosphere on Capitol Hill seemed promising when Senate Majority Leader Harry Reid (D-Nev.) promised a vote on S. 2231. However, that vote never came, and eventually CUNA conceded on Dec. 5 that the measure didn’t have the 60 votes necessary to clear a consideration vote in the Senate as a standalone bill.

Both CUNA and NAFCU had been pressing for the bill to be packaged with S. 3637, a banker-supported bill that would extend the transaction account guarantee originally put into place in October 2008. Once it became apparent S. 2231 didn’t have enough votes to stand alone, the pressure to package the bill intensified.

However, TAG has moved forward in the Senate without MBL legislation. The TAG bill easily passed the 60-vote threshold needed to be considered for debate and vote, earning 76 yeas that included all voting Democrats and a handful of Republicans. Following that vote, Reid promptly filled the amendment tree on S. 3637, which means no amendments can be added, and killing any chance for an MBL package deal. The move was a double whammy for credit unions, who had to stomach a banker victory while accepting their own defeat.

Making matters worse is the fact that bankers aggressively lobbied against raising the MBL cap. In fact, Donovan said banker opposition was the bill’s No. 1 obstacle, with congressional procedure a close second.

Donovan said CUNA has heard from a lot of disappointed folks on the MBL defeat and has resolved to be more aggressive against banker lobbyists, starting with an effort to defeat the TAG bill.